Tomahawk, WI 7/29/2013 (Basicsmedia) – This article takes a look at the latest performance of Key Energy Services, Inc. (NYSE:KEG), and seeks to use the information to advice investors on whether there is reason enough for them to get worried about their investments or not. More than that, the article will also take the views of analysts into consideration and use this to paint a picture which will hopefully help the investors to understand where they stand with regard to KEG. At the end of it all, the investors should be in a position to make an informed decision regarding their shares and investments in KEG.

Where is KEG Headed?

There has been too much ruckus regarding what the future of KEG really is like. This concern emanates from what has been reported of late regarding the future of this company. The latest financial news indicate that KEG’s earning revolve around $0.01 for every share held. These earnings are based on revenues of around $429.69m. While this may not offer much reprieve or information to the investor, one needs to understand that the revenue has never surpassed the $1,972m which it set in 2008. The revenues have always been on a downward spiral until 2012, when they shot up to around $1,960m.

It is important to understand one thing about KEG; its performance hasn’t been as bad as some might have projected. Analysts in this sector seem to have made projections which were below what KEG managed to achieve in the last four quarters. Consequently, shareholders may have a reason to smile should the trend continue and the company succeeds in beating the estimates when the results for the next quarter are announced. In the immediate past quarters, the best performance in terms of revenue came during the period covering up to June 30, 2013. Revenues of up to $516m was raised in this period.

Which Services is KEG Offering?

KEG offers a number of services. It is mostly involved in the energy sector, whose performance has bee fluctuating from time to time due to various factors. Key Energy Services (KEG) offers the following:

  • On shore services
  • Rig based well services
  • Oil field tracking
  • Ancillary oil field services
  • Contracts operations in onshore drilling
  • Produces and develops oil
  • Produces and develops natural gas reserves

What Are the Margins with KEG?

I often take a keen interest in company margins where financial performance is concerned. The main areas I take an interest in include gross, operating and net margins. Thus far, KEG has displayed the following; 31.0% as gross, 5.7% as operating, and -1.6% as net margins. If there will be more information regarding whether the gross and operating margins for KEG went up, compared to the same period last year, then I’d be able to say with certainty where it is headed to. If it will be proved that the two margins went up, then I’d be in a better position to say that KEG will have to increase demand for its products.

On the other hand, if it was to be noted that KEG’s gross and operating margins were on a downward spiral, after comparing the figures for last year with those of the current financial year, I’d say without any fear of contradiction that it is losing out to its competition. With all that having been said, let me be quick to say that regardless of any other information the company might issue in terms of its latest financial performance, what is not in doubt is the fact that it has a lot of work to do if it is to continue o a path of profitability hence better returns for its investors.

Let the diagram below, offer you a better outlook in terms of where KEG is most probably headed to, unless things manage to change drastically. Of course, it is well known that things won’t change on their own, and that the management will have to take an active role in order to turn around the fortunes of KEG.

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Image courtesy of http://www.fool.com/investing/general/2013/07/26/heres-how-key-energy-services-may-be-failing-you.aspx

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